Hydrogen is a solid growth platform for the industrial gas industry. In large volumes, industrial gas companies continue to supply hydrogen through their on-site pipeline (OSP) businesses to oil and gas refineries, basic and specialty chemical manufacturers, and food processors.
In smaller volumes, merchant liquid hydrogen is supplied via bulk, tube trailer, and cylinder and used in a wide range of applications including metallurgy, electronics, aerospace, food hydrogenation, glass, electrical power generation, and fuel cells. The greatest demand for hydrogen continues to be in the petroleum sector, where strict environmental regulations for clean air require lower sulfur fuels. Continuing to drive the hydrogen business for industrial gas companies in the future will be: the shift toward sale of gas (SOG) and hydrogen for chemicals in emerging markets; the acquisition/replacement of aging steam methane reformers (SMRs); and heavy/sour crude processing capability.
In this report we focus on applications and growth trends in the OSP and merchant hy- drogen business in the US. We examine the impact of the recent significant drop in crude oil prices on the OSP business and how the trend of light tight oil (LTO) might impact that sector. On the merchant side of the hy- drogen business we look at liquid hydro- gen capacity utilization rates and what they mean to the future of the hydrogen business. Ten years ago the hydrogen capacity utilization rate was about 55 percent. Since 2010 that capacity utilization has been increasing, causing the need for capacity expansion in the US for the first time in 15 years.
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